Quick answer

When custody changes, the IRS uses a residency-based “custodial parent” test: the person with whom the child lived for more than half the year is usually the one who can claim the child. A noncustodial parent can claim the child only if the custodial parent signs Form 8332 (or a written declaration that meets IRS rules) releasing the claim, or another specific exception applies (for example, a multiple support agreement). (See IRS Pub. 501.)

Why this matters

Claiming a child affects filing status, eligibility for the Child Tax Credit, Earned Income Tax Credit (when applicable), head-of-household status, and other tax benefits. Filing incorrectly can trigger delays, audits, or denied credits.

Key federal rules (plain language)

  • Custody/residency test: The child is the custodial parent’s for tax purposes if the child lived with them for more than half the tax year.
  • Tie-breaker rules: If a child lived with both parents equally or two taxpayers otherwise qualify, the IRS tie-breaker rules decide who claims the child (typically the parent with the higher adjusted gross income gets priority only after other tests). See IRS Publication 501 for details.
  • Form 8332: A custodial parent may release the right to claim the child for one or more tax years by signing Form 8332 (Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent) or an acceptable written declaration. The noncustodial parent attaches the signed Form 8332 to their return. (See Form 8332 instructions.)
  • Divorce decrees and private agreements: A court order or divorce agreement that assigns the right to claim the child does not override the IRS rules unless the custodial parent executes Form 8332 or an acceptable written release.
  • Qualifying child tests: Even after residency and release issues are resolved, the child must meet the qualifying child tests (relationship, age, residency, and support) to be claimed for credits such as the Child Tax Credit. (See IRS Pub. 501 and IRS Child Tax Credit guidance.)

What to do when custody changes mid-year

  • Count days of physical presence in each home. The parent with more than half the days usually is the custodial parent for that calendar/tax year.
  • If the parents agree to alternate years, document the agreement and have the custodial parent sign Form 8332 for the child’s alternate years so the noncustodial parent can claim the child without IRS uncertainty.
  • If an agreement isn’t possible and both parents claim the child, the IRS will apply tie-breaker rules. Be prepared to provide proof of residency (school records, medical records, DMV address, or other dated documents).

Practical steps and documentation (my experience)

  • Keep contemporaneous records of where the child sleeps each night: calendars, school attendance, and medical visit addresses work well in audits.
  • If you are the noncustodial parent and the custody arrangement says you can claim a child in certain years, ask the custodial parent to sign Form 8332 promptly after the custody year ends or at the time the divorce decree is entered.
  • If circumstances change (custody reversed, legal guardianship awarded to a grandparent), update agreements and retain signed releases. In my practice I’ve seen simple dated email confirmations get rejected by the IRS — use Form 8332 or a properly drafted written declaration.

Common mistakes to avoid

  • Assuming child support payments equal the right to claim the child. They do not. Tax rights follow residency and written release, not support payments.
  • Relying on a divorce decree alone. The IRS requires a signed Form 8332 or acceptable written release for the noncustodial parent to claim the child.
  • Failing to attach Form 8332. If the noncustodial parent claims the child without attaching the release, the IRS may disallow the claim and assess penalties or interest if tax is underpaid.

If the IRS disallows a claim or two parents file for the same child

  • The IRS will send a notice asking for documentation. Respond quickly with residency evidence and signed Form 8332 if applicable.
  • Either parent can file an amended return (Form 1040-X) to correct the claim. See our guide on Amending Returns After a Change in Filing Status or Dependents for step-by-step help: “Amending Returns After a Change in Filing Status or Dependents” (https://finhelp.io/glossary/amending-returns-after-a-change-in-filing-status-or-dependents/).

Related resources on FinHelp

Authoritative sources

Professional disclaimer

This article is educational and reflects general federal rules as of 2025. It is not individualized tax advice. For complex custody or tax disputes, consult a CPA, tax attorney, or enrolled agent who can review your court orders and records.